Franchise business in India is on an upward trajectory. The sector which delivered impressive results in 2017 and 2018 is all set to produce similar results in 2019 and beyond.
Whether you are in a metropolitan city or a tier II city in India, one look around you is sure to reveal bright signage of several international brands. KFC, Starbucks, Dunkin Donuts, McDonald’s, Puma, Baskin Robbins, Lee Cooper, Levis, American Tourister, Gini and Jony, Sesame Street Preschool and hundreds more global brands have made their way to Indian shores and are quite successful here.
For instance, India is the second largest market for Domino’s pizza after the US, with the pizza chain operating 1126 stores in 264 Indian cities. Starbucks the popular coffee chain opened its first store in India in October 2012, as a joint venture with Tata Global Beverages. Today, the brand has over 126 outlets across 10 major Indian cities.
As you can see, franchising is a great way for international brands to take advantage of the tremendous business opportunities in the country, with minimal risks.
Why is Franchising Successful in India?
Rapid Economic Growth and Social Development
The world’s fastest growing economy, India’s GDP grew by a whopping 7.2% in the last quarter of 2017. Economic experts predict that if India manages to sustain its current growth levels, the GDP will increase to 7.8% by the end of 2019.
Recent economic and cultural developments like mass urbanization, globalization, and increased brand awareness are some crucial factors that have impacted the economic growth of the country. With a vast urban population, India has emerged as one of the biggest markets in which franchising can thrive.
Industry reports suggest that the franchise industry in the country is growing at a rapid rate of 30 – 35% every year, and the turnover from the sector crossed a whopping $7billion.
Boom in Consumption
India recently witnessed a massive demographic transformation. With millennials now being part of the workforce in large numbers, the country saw a major consumption boom. High disposable incomes, preference for high-quality global brands, evolving lifestyles all contribute to the increase in consumption of both luxury and day-to-day products.
The rise in Entrepreneurial Spirit
The young workforce of today no longer wants to be tied to a routine 9-to-5 desk job. They are looking for exciting entrepreneurial opportunities that provide them with better work-life balance. And, Franchise business are the perfect solution for budding entrepreneurs. They get to invest in an established brand while enjoying the independence and flexibility of being business owners.
All these three reasons have contributed to the dynamic growth of franchising in India over the last few years.
Franchises – A Win-Win for All
Franchising is a win-win solution for all involved. For consumers, it gives the satisfaction and confidence of buying into an established brand. For business owners, the stability of the franchising business model helps them to overcome the major risks of opening a new business. Additionally, most franchisers offer support and hand-holding for franchisees helping them understand and learn the ropes of the business quickly and easily. For businesses looking to expand their footprint in India, franchising is a great way to build their brand in the country, while still retaining control over quality and other compliance factors.
Franchise Industry Report Card for 2018
When it comes to overall franchises, food and beverage options account for the majority of franchises in India. From casual fast-food chains like KFC, McDonald’s, Dominos, Krispy Kreme, Nandos, Dunkin Donuts, Hard Rock Cafe, to fine-dining eateries like Marrakesh, House of Momos, the Studs, House of Mandarin, the Sassy Spoon and more – franchises account for one-third of new food outlets opened in the country.
Industry reports predict that by 2022, the food and beverage industry in India will have doubled its workforce and the market value of the industry is projected to reach $46billion in the next two years.
Apart from food and beverages, other sectors that see a huge success in franchising include retail, healthcare, beauty, fitness, health, and education.
Additionally, India is becoming a hotspot for tourists from all over the world. International travelers travelling to India look for familiar hotel brands. This has led to the growth of hospitality franchises. Marriott, Hilton, Hyatt are all looking to expand their footprint in India aggressively. Recently, Hyatt announced that the brand is opening five new hotels in India in 2019.
Are there any Challenges faced by Franchising in India?
While franchising is an excellent way for an international brand to enter the Indian market, it comes with its set of challenges. The key to the success of any international brand in India is to meet the unique preferences of the local customer populace.
India is a diverse nation with rich cultural values. The needs and tastes of the Indian consumer are different from that of a customer in other western and eastern countries. For instance, McDonald’s though it serves beef and pork elsewhere has excluded these items from its Indian menu to cater to the sensibilities of Indian consumers. Additionally, the fast-food chain has separate vegetarian and non-vegetarian food preparation areas to cater to India’s large vegetarian population.
Apart from the cultural challenges, franchising in India involves bureaucratic red tape. To help you avoid business establishment and legal tangles, you can hire the services of Vedas Shaakha. Our experts know the Indian market well, and offer you expert guidance, every step of the way to help you get started in India.
Wrapping Up – The Road Ahead for Franchises in India
The economy of India is growing at an unprecedented rate than ever before. There is plenty of market potential that is still untapped. With a growing appetite for international brands, the time is perfect for global brands to expand their footprint in India via franchising.
Be a part of the great Indian success story. Reach out to Vedas Shaakha to help you get started in the country.